Yesterday we talked about compound interest and how it can create magic. Today we will consider one example. We will take Rs. 1000 and put in bank which gives interest of 12 % p.a. First case we consider is that the bank is so kind that it is compounding your interest per month. In this condition, your Rs. 1000 will double in 72nd month i.e. 7th year. If the bank is compounding your interest after three months, then at 72nd month, your amount will be Rs. 1257/-. So, you can see that just by adjusting the compounding time, the difference is whopping Rs. 750/- in the 7th year.
The same goes with the SIP i.e. Systematic Investment Plan as called by the advertisers. This is nothing but investing an amount in each month in one of the funds, so that the discipline of investing will give your results, which will also be aided by the compounding rule. For more details on how you can use the magic of compounding and the discipline of investing in each month to build a big corpus, visit the article in the following link.
http://phbawankule.blogspot.com/2013/08/magic-of-compounding.html
| Year | Month | Amount |
| 0 | 1 | 1000 |
| 0 | 2 | 1010 |
| 0 | 3 | 1020.1 |
| 0 | 4 | 1030.301 |
| 0 | 5 | 1040.604 |
| 0 | 6 | 1051.01 |
| 1 | 12 | 1115.668 |
| 2 | 24 | 1257.163 |
| 3 | 36 | 1416.603 |
| 4 | 48 | 1596.263 |
| 5 | 60 | 1798.71 |
| 6 | 72 | 2026.831 |
The same goes with the SIP i.e. Systematic Investment Plan as called by the advertisers. This is nothing but investing an amount in each month in one of the funds, so that the discipline of investing will give your results, which will also be aided by the compounding rule. For more details on how you can use the magic of compounding and the discipline of investing in each month to build a big corpus, visit the article in the following link.
http://phbawankule.blogspot.com/2013/08/magic-of-compounding.html
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